Time to buy: Sentiment gauge says stay bullish as markets bounce back

Global markets have bounced back sharply from their 2020 lows. And they may not be done yet if the 'equity risk-love' indicator is to go by

The contrarian-gauge devised by Bank of America Securities is currently in the ‘neutral’ zone, indicating that there may be more steam left in the rally. 

In March, the reading on the risk-love indicator was that of peak panic, suggesting it was time to buy. 

When the reading on the gauge is ‘extremely bullish’ it is time to sell. Currently, both developed and emerging markets (EMs) are in neutral territory. 

“The bottoming out of global growth is well underway now. And with overall sentiment still remaining benign and positioning staying light, we believe the massive supply of free liquidity will continue to thrust risk assets up. We stay bullish on Asia and EMs and suggest investors participate in the bull market,” said BofA in a note last week.